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Cityhood Suspended

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Posted: Thursday, July 25, 2019 9:00 am

The Incorporate Lake Gregory Committee (ILGC) held a community forum at the San Moritz Lodge on July 16. Most of the chairs were filled and many people stood in the back or along the sides of the great room. Interested and concerned residents of Crestline represented both sides of the issue with some in favor of cityhood and others opposed.

The meeting started off with several presentations, such as recreation and parks, law enforcement services and other topics. The agenda included discussion of a proposed budget, and financial issues led to a recognition that the cityhood effort must be put on hold, pending the outcome of Assembly Bill 818 (AB 818). 

During a discussion about a proposed budget, it came to light that San Bernardino County provided certain financial information last October that has been revised since then. ILGC has been operating under an assumption that the proposed city would receive  approximately 63 percent of some taxes that currently go to the county. Adjusted calculations from the county reflect a lower amount — around 45 percent.

This affects the financial feasibility of operating the proposed city.

A pending Assembly bill will affect how much funding ILGC can anticipate. If Assembly Bill 818 does not pass, the incorporation effort will suffer because it would put the budget in the hole to the tune of $1.8 million annually. However, if AB 818 does pass, it could help to make up that loss.

In such event, the ILGC would renew its efforts and continue to rally for establishment of a city.

At the July 16 meeting, ILGC acknowledged that incorporation is on hold until the outcome of AB 818 in January 2020. With hopes that AB 818 will be signed into law, the advocates say they will continue to promote the benefits of incorporation, including new efforts to get petitions signed after January 2020.

On the flip side, the voice of the opposition has a Facebook page called Don’t Incorporate Lake Gregory. The group also has a website: Those are two sources for anyone who wants to follow developments ­— with the understanding that it presents viewpoints against incorporation.

AB 818

Counties and cities have been receiving funding through the annual Vehicle Licensing Fee (VLF), which originally was returned to cities and counties for inclusion in their budgets for infrastructure and other line items. Several years ago, California started keeping the VLF for itself.

Cities and counties objected, and legislation was enacted to allow the state to keep the VLF. However, an equal amount would be returned to cities and counties by allowing them to keep that amount collected from property taxes. This applied to cities and counties that were already incorporated; it did not apply to any new cities established in the future.

Some state senators and assembly members have worked since 2012 to correct this as it pertains to newly incorporated cities. Twelve separate bills attempted to allow this property tax in lieu of VLF to go to newly incorporated cities. Five of the bills never made it out of committee; two saw no action or discussion in committee; the governor vetoed four of them. Now AB 818, which mirrors a bill that died in committee last year, has been suspended in committee.

According to California Legislative Information (at, existing property tax law requires the county auditor to allocate property tax revenue to local jurisdictions using specified formulas and procedures. Each jurisdiction is allocated an amount equal to the total revenue allocated to that jurisdiction in the prior fiscal year, subject to modifications and that jurisdiction’s portion of the annual tax increment.

Property tax law also requires that the amounts of property tax revenue deemed allocated in the prior fiscal year to the county, cities and special districts be reduced in accordance with certain formulas. Revenues not allocated to the county, cities, and special districts are transferred to the Educational Revenue Augmentation Fund in that county for allocation to schools, community colleges and the county office of education.

Each city and county receives additional property tax revenues in the form of a vehicle license fee adjustment amount from a Vehicle License Fee Property Tax Compensation Fund in each county treasury. The law requires that these additional allocations be funded from ad valorem property tax revenues allocated to educational entities.

Existing property tax law, for the 2006–07 fiscal year and each fiscal year thereafter, requires the VLF adjustment amount to be the sum of the VLF adjustment amount for the prior fiscal year, if specified provisions did not apply, and the product of the amount as so described and the percentage change from the prior fiscal year in the gross taxable valuation within the jurisdiction of the entity. Existing law establishes a separate VLF adjustment amount for a city that was incorporated after January 1, 2004, and on or before January 1, 2012.

This bill, AB 818, would establish a separate VLF adjustment amount for a city incorporating after January 1, 2012, including an additional separate VLF adjustment amount for the first fiscal year of incorporation and for the next four fiscal years thereafter.

By imposing additional duties upon local tax officials with respect to the allocation of ad valorem property tax revenues, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

AB 818 was read for the first time on Feb. 20, 2019, and went to print. It was heard in committee on March 23 and continued through the legislative process until the first hearing was postponed on May 16. Since then, it has been in the suspense file.

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